E-Malt.com News article: South Africa: SABMiller and Heineken rowing over Amstel beer

Heineken NV and SABMiller Plc clashed over the price of the Dutch brewer’s Amstel beer in South Africa, two weeks before the start of the soccer World Cup, Bloomberg reported on May, 26.

Heineken’s Amstel brand this week began its “Ask Why?” campaign to explain a recommended charge of 10 rand ($1.26) for a 660 milliliter (22 ounce) Amstel beer, compared with about 7 rand for 330 millilters for non-refundable bottles. Amstel is responding to a drive led by SABMiller that said tavern owners will make lower profits by charging the recommended price.

SABMiller’s domination of South Africa’s beer market has been slipping since Heineken opened a local brewery in Africa’s largest economy, with its share dropping 2.1 percentage points to 87.7 percent in the year through March. Amstel was brewed by SABMiller in South Africa under license until 2007. SABMiller has said it expects to sell 12 million more units of beer at the World Cup tournament, which begins June 11.

“We want to know why SAB is promoting higher prices,” Gavin Pike, marketing director of Brandhouse Ltd., which distributes Amstel in South Africa, said in an interview. SABMiller will “speak up when it believes” that competitors are misleading retailers, Harald Harvey, the director of strategy for SABMiller’s Johannesburg- based South African unit, said in an e-mailed response.

Brandhouse has made a complaint to the Advertising Standards Authority of South Africa, accusing SABMiller of disparaging Amstel’s brand and infringing on its trademark, Pike said. The ruling is expected on May 28.

The Amstel advertising campaign encourages customers to pay no more than 10 rand for the beer, which excludes the 1 rand fee for the returnable bottle, and, if they are charged more, to ask why, according to e-mailed versions of the advertisements. The smaller format bottle is used to differentiate Amstel from the 750 ml bottle used by SABMiller, Pike said.

SABMiller is not setting a price for Amstel, Harvey said. The world’s second-largest brewer is trying to show retailers how they will be losing profit, he said.

“Selling at 10 rand means you make less money on every Amstel you sell,” according to an e-mailed version of leaflets prepared by SABMiller for tavern owners. “This could mean A LOT LESS PROFIT for you this year,” it said.

The leaflets, confirmed by SABMiller, include a formula to calculate how much money could be lost by selling Amstel following Brandhouse’s advice instead “of the more profitable beers like Castle Lite.”



26 May, 2010